2010-2012 Netflix Financials
The Evolution of the Netflix Empire
Netflix has quickly become a household name by saturating the market with a new age way to rent movies. Established in 1998, Netflix geared its business to provide consumers with quick and easy access to their favorite movies without the need to leave their homes. As the business developed and other popular sites, such as YouTube, began to gain popularity Netflix entered the market of streaming online content. During the infancy of their instant service Netflix still relied heavily on mailing DVDs to offer their customers a wider range of movies and TV shows. However, as their steaming library grew the mindset of the company began to shift. As they transitioned away from their mailing movies, key business decisions were made that caused many to question the future of the company. The adaptation of Netflix into the era of instant movie viewing can best be described by analyzing the time period from 2010-2012.
The “Video Store” Era
From early 2010 to the close of the year, Netflix saw growth across many aspects of the company, including stock price, profit, and subscribers. As shown in the stock price graph below, Netflix’s per share value increased from approximately $53 to $175, an increase of more than 200%. This can be attributed to a growth in popularity as the company attracted nearly 8 million new subscribers, which led to $2.1 billion in total revenue as seen on the income statement. Continuing with the same report, accounting for the cost of goods sold, Netflix had a gross profit of $805 million, leading to a net income of roughly $160 million.
Looking at the statement of cash flows for the year, there are a few major components that stand out. Over the course of the year, they bought back about $90 million dollars worth of their own stock. This makes sense due to the large increase in price. It would have been a safe move to invest in themselves and keep their cash internal. This pairs with the investments
Netflix has quickly become a household name by saturating the market with a new age way to rent movies. Established in 1998, Netflix geared its business to provide consumers with quick and easy access to their favorite movies without the need to leave their homes. As the business developed and other popular sites, such as YouTube, began to gain popularity Netflix entered the market of streaming online content. During the infancy of their instant service Netflix still relied heavily on mailing DVDs to offer their customers a wider range of movies and TV shows. However, as their steaming library grew the mindset of the company began to shift. As they transitioned away from their mailing movies, key business decisions were made that caused many to question the future of the company. The adaptation of Netflix into the era of instant movie viewing can best be described by analyzing the time period from 2010-2012.
The “Video Store” Era
From early 2010 to the close of the year, Netflix saw growth across many aspects of the company, including stock price, profit, and subscribers. As shown in the stock price graph below, Netflix’s per share value increased from approximately $53 to $175, an increase of more than 200%. This can be attributed to a growth in popularity as the company attracted nearly 8 million new subscribers, which led to $2.1 billion in total revenue as seen on the income statement. Continuing with the same report, accounting for the cost of goods sold, Netflix had a gross profit of $805 million, leading to a net income of roughly $160 million.
Looking at the statement of cash flows for the year, there are a few major components that stand out. Over the course of the year, they bought back about $90 million dollars worth of their own stock. This makes sense due to the large increase in price. It would have been a safe move to invest in themselves and keep their cash internal. This pairs with the investments